A Closer Look at Insurance Premiums
How Do Insurance Premiums Work?
It is typical for the term “premium” to be misunderstood among those who are just starting to figure out their insurance needs, but believe or not; this also happens among those who have had insurance for years.
Simply put, the premium is the cost of your insurance. It is the amount of money that your insurance company will charge you for the policy you will purchase. The insurance premium can be paid annually, semi-annually, or in most cases, monthly. Although, some companies prefer it to be paid up front.
Premiums have a base calculation and then can be impacted by other factors, such as:
That may vary with each insurance company, but usually, where you live, your insurance history, along with other individual factors determined by your insurance company, will be taken into account when calculating your premiums. You could either get an increase or a discount based on that information.
Type and Amount of Coverage Chosen
The more robust your coverage is, the higher your premium. For example, full coverage will undoubtedly be more expensive than covering the basics. However, if you were to choose a policy with a higher deductible, your premiums are likely to be lower.
Target Markets and Competition in the Industry
Premiums can also increase or decrease depending on your insurance company’s preferred market segment. Sometimes, an insurance company might lower the rates to attract a particular audience, and if you’re part of that audience, that could work in your advantage.
Premiums can vary from one insurance company to the next. If you want to make sure you get the best insurance premiums in the market, the best you can do is shop around. Working with an independent insurance agency like AAI Central will be easier to have access to a variety of products and prices from different insurance companies. To get the best insurance prices in Colorado, contact us today!